September 18, 2015

Qualcomm Stadium: a Boondoggle from the Get-Go?

From the original San Diego Free Press circa 1968, we reprint the rundown on Qualcomm Stadium

Transcribed by John Lawrence

Hi, sports fans. Big Jim here.

Well, fans, there is a big spat brewing in major league San Diego and from this experienced observer's view the losers in this main event are going to be the city's middle- and lower-income taxpayers.

This whole new controversy is revolving around that great concrete muskmelon in Mission Valley, the San Diego Stadium.

As the Free Press goes to the printers, the news is out that the City of San Diego is suing the San Diego Chargers for one year's back rent (more than $200,000). The Chargers apparently have decided that they don't want to pay rent, at least not for the next seven years.

But that is just one of a long series of rubs - one of the first rubs in how that stadium got there in the first place.

Who Wants It?

The San Diego Stadium holds 50,000 people. The city of San Diego holds nearly 800,000 people. This means that 750,000 people in San Diego couldn't use the stadium on a day that everyone decided to see a ball game. But that doesn't mean that these 750,000 squabbling over a knot hole in the stadium's wall, are not paying for the place.

The stadium and its accoutrements cost $27.75 million, ostensibly. Actually, after interest is paid on the stadium's bonds, the total cost of it is at least $52.4 million.

The stadium is the brain child of local millionaires, who euphemistically call themselves "sportsmen," who emphatically pointed out to the public that property taxes would never be used to pay back the principle and interest on a the stadium bonds.

Instead of using property tax, these sports czars explained, the City would pick up the tab with the sales tax it received back from the state, along with some other revenues (which ultimately proved to have originated as sales tax, too).

The local media played the sports czars' tune with feeling, assuring the public that the stadium would cost little more than a "Yes" vote on the Stadium proposal on the November, 1965, general election ballot. And 100,000 of the 140,000 voters that turned out swallowed the bait.

No economist would argue against the notion that sales taxes are the most regressive form of tax we have. That means that the middle- and lower-income families are the hardest hit and carry the heaviest burden of sales taxes, while the wealthy are hardly scathed.

On the other hand, equitably administered property taxes put the brunt of the cost on the people most capable of bearing it and who ultimately benefit most from projects like sports stadiums - the wealthy.

(Even though equitably administered property taxes only exist in Camelot, they are still less burden on the middle-and lower-income families than are sales taxes. Dubious homeowners should sit down one day and figure how much they pay in sales tax compared to property tax each year.)

But the people have been conditioned to believe (by corporate media and those corporations who exercise control over them through advertising) that property tax is their ultimate bugaboo — and 100,000 of more than 600,000 San Diegans voted "Yes" on the stadium proposal.

So let's take a look at the old score board and see who's winning in the final quarter.

Sports czars ahead!

This far in the game, the middle- and lower- classes seem to be trailing. About 17 percent of San Diego's 1965 population committed the people of San Diego to pay $144 million annually for the next 35 years. People's score: minus $52,4 million.

Local and out- of- state contractors, architects and building suppliers hauled in $15.5 million on the stadium's construction and about another $12.3 million in trimmings. Construction companies' score: $27.8 million.

Motel and restaurant interests in San Diego anticipated an increased annual take of $24.9 million because of stadium visitors. Motel and restaurant interests score: $24.9 million annually.

The San Diego Chargers, whose annual revenue has risen from $660,000 in 1962 to $2.1 million last year, are demanding that they be allowed the use of the stadium rent tree for the next seven years. If they get away with this, they will augment their already mounting earnings by an estimated $2 million for those years. A great deal of their earning power was directly a result of the stadium. Chargers' score is difficult to determine but in the neighborhood of $3 million annually.

The San Diego Padres baseball team has worked out a [indecipherable] deal with the City administration. For the next seven years they will pay eight percent of their ticket sales to the City as rent.

The City estimates that this will amount to $500,000 annually. But then the City turns around and pays the Padres (going under the name of the San Diego Stadium Management Company) $306,000 each year to manage the stadium.

This will make the Padres actual rent about $194,000 per year. The Padres score, by the City's own figures: slightly over $6 million gross.

How does that grab you, sports fans? It looks like San Diego's "sportsmen" have learned something from San Diego's defense industries about government subsidy.

Welfare for the Rich

In 1965, when the designs were laid for the San Diego Stadium, the city manager, then Tom Fletcher, admitted that the stadium would not be an earning proposition. He estimated that with just a major league football team the stadium would make about $120,000 annually. If the City were to pick a Major league baseball franchise, the figure might be boosted to $340,000.

This amount, he explained, would go toward retiring the interest and principle on the stadium bonds, about $1.5 million yearly.

What Fletcher forgot to tell us was that the City would lose property tax revenues on the 166 acres on which the stadium stands. In 1965, the land was valued at $4.1 million. At present property tax rates, the City is losing between $100 000 and $120,000 each year. As Mission Valley property values soar in the next decade, these losses will be compounded.

Defenders of the stadium argue that in 35 years the stadium will be all paid off and be a "real moneymaker" for the people of San Diego.

In 35 years- - considering our present rate of architectural and technological growth -- the San Diego Stadium will look to us like the Whaley house looks to us now.

There will be groups of "sportsmen" wanting to tear it down and set out on another publicly subsidized project (unless, of course, today's revolutionary groups haven't changed all that by then), and there will be groups of monument minders who will want to preserve the structure for historical reasons.

Who Let the White Elephant in?

Why did such a beast ever get by the voters? Because there was no critical media. There was no scrappy little newspaper like the San Diego Free Press. There were only corporate mass media intent on getting a piece of the action.

James Copley, owner-publisher of the San Diego Union-Evening Tribune, certainly wasn't going to torpedo the stadium. He owns about a million dollars worth of the Chargers.

That's about all for this issue, sports fans. Next issue Big Jim will really lay some heavy facts on you about who, how and how much on that concrete muskmelon. There should be some really interesting playbacks on the San Diego sport czars.

In the meantime, Big Jim is going to see about opening up a jock strap factory and having the City of San Diego subsidize me, because, after all, "It's not whether you win or lose that counts; it's how your capital gains!"

How Our Stadium Saved Hilton's Ego & Other Chuckles To Cry Over

by Jim Knastick (Part 2 of a 3 part Article)

Hi sports fans. Big Jim, again.

Well, fans, last issue - - when we looked into that great muskmelon in Mission Valley - - we found a bill for $52 million addressed for the little taxpayer in San Diego and nothing but profits for local sports czars (your druggist knows them as merchants, financiers and industrialists).

Current vignette, fans: Taking Care of Barron.

The Boys Club

The story of our stadium goes back to late 1959 when Lamar Hunt, son of the right-wing zealot billionaire H.L. Hunt, Bud Adams, Jr., son of the chairman of the Phillips Petroleum company, and Barron Hilton, son of the hotel magnate Conrad, pitched together several million dollars to create the American Football League.

Hunt was suffering a rebuff by the National Football League that had just refused to grant him an NFL franchise for Dallas. So he threw in with Adams to form his own league.

Hunt took a Dallas franchise, Adams took one for Houston and they set up six others. The Los Angeles franchise went to Barron Hilton.

As head of the Carte Blanche credit card company, Hilton decided to call his team the Los Angeles Chargers in hope of stimulating business.

In its first year of operation the AFL had a combined loss of $4.5 million. Hunt bore the heaviest losses - - $1 million, and Hilton ran a close second at $900,000.

It took Hilton less than a sing [?] to draw only 11,000 people in the LA Coliseum, which holds 101,000. The day they won the AFL’s Western Divisional Championship they drew 9,900.

It took Hilton less than that year to decide that his AFL Chargers were no competition for the LA Rams. He found it very embarrassing to draw only 11,000.

Hilton knew he had to do something. His old man couldn't bail him out; he was too busy trying to keep Castro from taking over the Havana Hilton.

Then young Hilton smelled a fish to the south: San Diego. The local sports czars (though still would-be) also smelled a fish: the public. The "civic leaders" of San Diego fell all over themselves to get the Chargers to move to San Diego, which they eventually did - - but not before Hilton got a promise from the City government to make some improvements in the Chargers' future home, the Balboa Stadium.

The City followed Hilton's bidding. The cost was estimated at $800,000 originally. By the time the work was done the cost was $1.5 million. Then the Chargers' rent was waived for the first year and only a pittance was paid in successive years.

During a series of preseason exhibition games, the largest audience the Chargers could draw was 13,000 paid admissions. Charger stock, which had sold at $3 a share when the team first moved to San Diego, dropped to $2.25. It slowly inched back up to its original price after the Chargers had a winning streak during the regular season. Even then their games did little better than draw an average of 30,000 spectators, and Hilton began to feverishly look for buyers.

Enter Sports Czars

As Hilton was trying to find himself (or whatever else he was trying to find in San Diego), a group of 200 San Diego "sportsmen" organized the Greater San Diego Sports Association (GSDSA).

These men, heads of banks, bottling companies, contracting and construction firms, stated the aims of the Association as: 1. seeking a major league baseball franchise for San Diego. 2. boosting the Chargers, and 3. getting an all-purpose stadium built.

George Kirksey, the man who ramrodded a $22 million bond issue in Houston for the Astrodome, was the keynote speaker at the GSDSA organizational meeting. A. B. Polinsky, the head of the San Diego Coca- Cola Bottling Company was named as the acting president.

From the time of its inception the GSDSA had been bucking for a multi-purpose stadium. It came as no surprise in December, 1963, when Mayor Curran appointed GSDSA president, Paul Carter, to preside over The Mayor's All-American Stadium Committee, another group of "sportsmen" that was delegated the responsibility of determining the feasibility of the stadium.

The Committee was authorized by the City to spend $100,000 on the study. When the announcement was made, City officials said that they hoped private funds would be used. Apparently almost the whole amount came from the public's purse.

Other members of the All-American Stadium Committee included William Black, president of the Bank of La Jolla; William Elser, president of the Elser Elevator Company; Kenneth H. Golden, head of the Kenneth H. Golden Construction Company and a director of the City Bank of San Diego; A. B. Polinsky, head of Coca-Cola here; and Harry Sugarman who ran his own investment company. (These are among others about whose sports interests Big Jim wonders.)

Bailing Out Barron

Rumors have it that by 1964, Barron Hilton was spending more time knocking on the doors of prospective buyers for his team and franchise than he was with his team. He was also threatening to move the team to another city.

Should he actually move the team to another city, all justification for building a stadium (replete with lots of tasty profits for the czars) would be lost. So once more Paul Carter made another unsurprising entrance. This time it was before the City Council in August, 1964.

Carter pleaded with the Council to put a $25 million "general obligation" bond issue on the November, 1964, general election ballot.

The deadline for putting issues on the ballot was drawing near, and Carter told the Council, "We have to place something on the ballot now or we are cooked for another year." That Carter's committee was still waiting on the $35,000 stadium feasibility study that wasn't due until October, might make Big Jim think that Carter was in something of a hurry.

But the cooler heads prevailed, to both the chagrin of Paul Carter and Barron Hilton. A general obligation bond issue would have required approval by 2/3's of San Diego's registered voters.

William Quirk, president of the San Diego Chamber of Commerce at the time, told the Council that Carter's proposal "reflected poor timing" because there wasn't sufficient time to "mount a campaign that will guarantee passage of the bond issue." If the bonds lost November, 1964, Quirk explained, the stadium measure would be set back for years. Besides, he added, the bond issue could jeopardize other ballot issues. (Other ballot issues included pay raises for Council members and the Mayor.)

Hilton was dejected when the Council announced that it wou1d not act to put the bond issue on the November ballot.

It was about then that Hilton, who knew little about the odd machinations of San Diego's fine establishment, started to sell his team to C. Arnholt Smith, a local industrialist (and owner of the San Diego Padres) who knows plenty about the machinations of San Diego's establishment. The sale price was set at a pitiful $750,000, which would just start to cover his first year losses in Los Angeles.

Then, apparently, someone put a bug in Hilton's ear, and he dropped the idea like a hot football.

Super Campaign

All through 1965, San Diego "sportsmen" waged a super campaign. Their theme was that the stadium would be a boon for local tourism, which they stressed was some kind of panacea for the San Diego economy.

Tourism's appeal is based on the remembrances of the '50s and the defense layoffs. Obviously, explained the "sportsmen," the stadium would bolster tourism and take San Diego's economic emphasis away from defense. (Well, fans, tourism accounted for about 6 percent of San Diego' s gross income last year, while the 11th Naval District made up 25 percent. San Diego's 5 largest corporations are General Dynamics Convair, Ryan, Rohr, Solar and National Steel and Shipbuilding Company. San Diego is the same old war baby it has always been.)

Despite the chest beating of stadium boosters, public support wasn't really very strong during the campaign (or at the polling places for that matter).

The Citizens for a Stadium, the only campaign committee for the stadium, reported only receiving $932.25 in contributions of $10 or less (if each, of all those contributions in this category, gave only $1, that's only 932 and 1/4 people.

The $11 to $25 contribution category amounted to $660. Considering that the total contributions were $39,617.09, small contributions only accounted for 4% of the committee's backing.

All contributions over $25 were listed by the contributor at the City Clerk’s office, and, fans, let Big Jim tell you that they're interesting. Surprisingly, the GSDSA was the second largest contributor. They only contributed $10,000. But what's more interesting is the first and third highest contributors, The Associated General Contractors of San Diego County and The San Diego County Rock Producers Association, respectively.

The General Contractors describe their Association as an organization of local "heavy construction contractors, the builders of freeways, airports, dams and high rise structures." They contributed $12,500.

The Rock Producers Association is an organization of 18 local transit mix concrete companies, cement and sand and gravel companies. They donated $4,000. Rancho Bernardo, Inc. contributed almost $3,000, and the San Diego Pepsi-Cola Bottling Company (then headed by the late Frank Alessio) put $500 on the line. A Schlitz-Burgie and Lucky Lager distributor put up $1,000. And the list goes on, with many $50 contributions from all sections of the White-Power-Structure.

By the registration deadline, September, 1965 there were over 244,000 registered voters in San Diego. Only 140,000 voters showed at the polls in November. According to Big Jim's slide rule, that’s about 58 percent of the registered, and only 100,000 voted "Yes" on the stadium proposal – that’s 41 percent of the city’s registered voters.

But, then, the average fan is asking himself, how did the stadium get built?

Well, fans, the City wanted to simplify the administration of the bonds, according to the City. So it did an appendectomy on the "general obligation" bond (like Big Jim said, that would have required a 2/3’s vote of all registered voters) and changed it into a City charter amendment (which requires only a simple majority of people voting).

The charter amendment proposed to form a "joint power agreement" between the City and the County governments to administer the stadium, hold title to it and to issue bonds for its construction.

Magic Tally

After the election, all the City’s czars were beating their chests, bragging about the "72 percent landslide victory". Home safe, a local sportswriter said that he wanted to "make it clear once and for all" that what the public voted on wasn't a general obligation bond issue, but a charter amendment. Big Jim felt badly that the sportswriter (who has been described as the richest small town sportswriter in the country and was a member of the GSDSA) didn't tell his readers that before the election.

The charter amendment's bond wording leaves the so-called Stadium Authority an open-ended power to issue bonds. So the idea that they will only issue $27 million of bonds ain't necessarily so. If they wanted to, they could issue bonds from now through the next 50 years.

Barron Is Back In The Saddle

After the new stadium was approved, Barron Hilton was a new man. During a half-time ceremony in Balboa Stadium, Hilton walked onto a platform before thousands of San Diegans and signed a ten-year occupancy agreement, saying that the Chargers would pay 10 per-cent gross of all ticket sales at the new stadium and receive a third of all concession and parking profits.

Less than a year later (to show his gratitude to San Diego), he sold the controlling interest of the Chargers to two Los Angeles tycoons for $10 million. Quite an improvement over $750,000 eh, fans? Well, fans, Big Jim is running out of newspaper faster than he's running out of facts and other historical curiosities. So I guess Big Jim will stretch this out one more issue after this one so we can take a look at how the contracts were awarded and where those profitable bonds went.

Until next time, fans, this is Big Jim with a few late scores off the sports wire: $3.5 million to $329,000; $275,000 to $578,000; and $20.1 million to $1.95.

Big Jim Says: ‘Let’s Put the Lid on Her, Sportsfans.’

Part Three of a Two Part Series

Hi, sports fans. Big Jim, King of the Sport Freaks, here.

Everybody in the press box is getting upset with Big Jim taking up so much newspaper, so I’m going to wrap up the stadium thing, PDQ.

When construction bids were open for the stadium, the lowest bidder was from a group of three companies: Alex Robertson and W. D. Larsen companies of San Diego and the Donovan Construction Company of St. Paul.

Their bid was $14,082,240. The other two bids were about $15.4 million and $15.8 million, therefore the Robertson, Larsen and Donovan bid was accepted.

But, alas, the City Manager of that day, Tom Fletcher, exclaimed at what a bargain that was -- such a bargain that he and the City Council approved an additional $1.5 million worth of keen 'additions,' including some extra elevators, escalators, a restaurant and such.

That put the final cost above the bid of the next highest bidder.

Not that the costs stopped there, either.

By the time the actual edifice was completed, the Robertson, Larsen and Donovan people had submitted about 50 changes in cost to the City Council for approval. The City was free with its approval. The cost changes amounted to $620,433 above the $15,546,891 figure - - totaling $16,167,324.

That is more than $2 million above the original bid and almost $400,000 above the highest of the three original bids. How does that grab you, sales tax fans?

Robertson-Larsen-Donovan wasn't the only company submitting price changes. All in all there were probably several hundred cost changes by people who had one kind of contract or other on that silly stadium.

Then there is the question of the bonds that were issued to pay for the stadium.

The latter part of 1965 and early 1966 were excellent times for selling municipal bonds. People were looking around to jump on the next issuance of bonds and interest rates were low.

Today, tax-free municipal bonds are getting interest rates as high as 5.1 per cent. In the days of the stadium bonds, they were only getting about 4 per cent -- that means there were a lot of people interested in getting hold of the bonds. So one might ask, "How do we assure ourselves that insiders involved in the issuance of the bonds don't take unfair advantage of their knowledge in making a bid?"

Two Chicago bond houses submitted the lowest bid on the bonds: 3.969847 percent. That amounts to $24,672,203.74 of tax-free profit over a period of 35 years.

There are a lot of Chicago interests in San Diego and vice versa. So, Big Jim asked himself, "Where did that money go?"

Big Jim called the City Treasurer’s office and asked who received the bonds. The people there said they didn't know. They thought it went to two Chicago bond houses. "Sure," said Big Jim, "but they are only middle-men. Do you know where they went after that?"

"No," said the City, "All we care about is that we got the money."

Big Jim then learned that Southern California First National Bank (SCFN) was the trustee for the stadium authority. So Big Jim called their trust department and they were unaware (or so they said) as to where the bonds went.

(Little vignette, fans: You may already know that the Foodmaker Company - -Jack-in-the-Box - - owns a controlling interest in Southern California First National. According to the recent Patman report on bank trust departments, SCFN has 73 percent of all San Diego's trust funds and one of its directors, Richard T. Silberman, is head of the Stadium Authority, the people authorized to spend stadium money.

Rumor has it that SCFN branch drive-thru windows are serving Bonusburgers to anyone with one hundred or more dollars in their checking accounts.

That's enough for now, sports fans. But remember, this week is International Eat the Rich Week, paying tribute to one of the fastest growing indoor sports in the world.